Summary:
United Continental reported mixed financial results in the third quarter of 2014 wherein the bottom line outpaced the Zacks Consensus Estimate while the top line missed the same. Low fuel prices coupled with increased air travel and fleet restructuring programs continue to boost profits for the company. Moreover, expansion of its global and domestic route network and rollout of several value-added services will likely propel growth moving ahead. However, the company is highly exposed to foreign currency exchange rate risk. Moreover, a highly leveraged balance sheet along with increased capital expenditure related to new fleet purchase may continue to dent its cash position. We, thus, downgrade our recommendation on United Continental from Outperform to Neutral. Our target price is $69.00 per share.
Overview:
Based in Chicago, United Continental Holdings, Inc. is the holding company for both United Airlines and Continental Airlines. United Continental Holdings was formed by the merger of Continental Airlines with UAL Corp. on Oct 1, 2010. The merger created the world's largest airline, overtaking Delta Airlines, which had acquired Northwest Airlines in 2008. United Continental maintains a significant presence in Houston, the company's largest hub and has opened a new terminal there.
United and Continental Airlines' operations primarily comprise transportation of people, property and mail throughout the U.S. and overseas. United Continental transports people and cargo through their mainline operations which utilize full-sized jet aircraft, and regional operations which utilize smaller aircrafts operated under contract by three carriers United Express, Continental Express and Continental Connection. With key global air rights in the U.S., Pacific region, Europe, the Middle East, Africa, and Latin America, United Continental operates the world's most comprehensive global route network.
The company, through United Airlines and Continental Airlines as well as their regional carriers, operates an average of more than 5,300 flights a day to 360 U.S. domestic and international destinations. The airline's departure hubs are located at Chicago, Cleveland, Denver, Guam, Houston, Los Angeles, New York/Newark, San Francisco, Tokyo and Washington D.C.
United Continental Holdings, Inc. (UAL): Read the Full Research Report
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
UNITED CONT HLD (UAL): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research